A company bought a new machine for $\$110000$ and expected it to last for 10 years. The machine was assumed to have a residual value of $\$10000$. The company applies the straight-line method of depreciation and charges depreciation in full in the year of purchase and sale. At the end of its life, the machine was sold for $\$20000$. Which statement is correct?
- AThe annual depreciation charges have been overstated by $\$1000$.
- BThe choice of the depreciation method has no effect on the annual profits of the company.
- CThe company can replace the machine from accumulated depreciation charges over its life.
- DThe effect of depreciation had been to reduce profits by a total of $\$110000$ over the life of the asset.